Gaming Gets Serious

It doesn't take much to get 26-year-old Janet Ha fighting.
Usually, it's a dare received via an Instant Message or the nightly
gathering of friends online that gets her into battle mode. Several
evenings each week, the Web programmer from New York City fires up
Counter-Strike, a multi-player computer game that simulates a war
against terrorists. She connects to a server that hosts friends
playing the same game and launches into cyber strife, often into
the wee hours of the night. Ha admits to spending about 20 hours a
week playing the game, improving her gamesmanship and marksmanship
with each successive hour. She's so good, in fact, that she says
opponents don't realize she's female. Nor does she advertise that
detail. The one time she logged on with a female name, her
opponents didn't believe it, saying she played too well to be a
woman. Yet the differences between Ha and her male counterparts are
not lost on her. â€œGuys just want to crush each other,â€?
she says. â€œI like to cooperate.â€?

Computer gaming isn't what it used to be. Not long ago, the
typical players were scruffy teenage boys shooting at TV screens in
their basements. But with the online gaming explosion of recent
years, gamers have become a more sophisticated lot, and are now
more representative of the general population. More women are
participating, and older people as well, many of them
professionals. According to Nielsen//NetRatings, 41 percent of
people who frequent online game sites like GameSpot, Candystand and
Pogo are women, and 43 percent are ages 25 to 49. Meanwhile,
Reston, Va.-based com-ScoreNetworks, a firm that measures online
game use, confirms players are beginning to resemble the general
population. On average, 8.9 percent of players at the Top 10 gaming
sites are African American, 4.2 percent are Asian and 79.3 percent
are white. More significantly, about 35 percent of players on those
sites earn $50,000 to $100,000 annually, while 16.2 percent take
home more than $100,000.

These demographics spell opportunity for game makers, console
manufacturers and game sites hoping to sell units and attract
eyeballs. The Interactive Digital Software Association (IDSA), a
gaming industry group based in Washington, D.C., estimates that
more than 219 million computer and video games were sold in 2000,
almost two games for every household in America. And Port
Washington, N.Y.-based market research firm NPD Group says retail
sales of video games, including hardware, software and accessories,
reached a record $9.4 billion in 2001, up 42 percent from the
previous year's sales of $6.6 billion. In turn, Cambridge,
Mass.-based Forrester Research predicts that the U.S. video games
market will grow to $29 billion by 2005.

Such statistics haven't been lost on marketers, either. As
gaming goes mass market, the biggest opportunity may lie in
advergaming â€" the interactive advertisements that merge
online games with product placement â€" through which
businesses can target specific demographics. Sponsors of
advergaming sites like Nabisco's Candystand are betting they can
build brand loyalty among players, and eventually reap the rewards
when gamers become online buyers. â€œExperience is an enormous
predictor of what people do online,â€? says Harrison Rainie,
director of the Pew Internet and American Life Project.
â€œNewcomers do all the fun stuff like e-mail games and Instant
Messaging, but eventually, in two or three years, they make a
purchase.â€? The potential of advergaming to drive sales has
kept the marketing dollars flowing from the likes of auto giants
Ford and General Motors, among the first companies to successfully
incorporate such tactics into their branding campaigns. New York
City-based Jupiter Media Metrix estimates that online advergaming
revenue, including both traditional advertising and advertising
within games (such as a Coke billboard displayed within a racing
game), will reach $774 million by 2006, up from $134 million in
2002.

Yet these games are far from a proven marketing strategy. While
it's possible to track the growing number of consumers who play
them (as well as how often and how long they play), some industry
watchers say it's hard to know what actual impact the games have on
consumers' brand loyalty â€" or their likelihood of purchasing
a product promoted through an advergame. However, despite their
early stage of development, advergames are already emerging as one
of the Internet's most promising ad strategies â€" and they
show little sign of slowing down.

Two Worlds

Players have a choice of two main categories of games these days
â€" stored and online. Stored games come packaged for play on
consoles such as Sony's PlayStation, Microsoft's Xbox and Sega's
Genesis, and must be purchased at a store. These typically offer
â€œfast-twitchâ€? games with high-speed action and
cutting-edge graphics to keep the adrenaline pumping, and tend to
appeal to an audience of young, die-hard males. Most of these games
can be linked over the Internet using modems or network
connections, allowing gamers to play together and share information
on their moves while leaving all the number crunching to the
console. Even the U.S. Army has begun using such games to help
train its troops. The online, or Internet-based games, on the other
hand, require no special equipment but tend to be far slower. These
â€œslow-twitchâ€? games must allow for lag times because
graphics and other details are being sent over the Internet, and
the speed of modem connections varies. Included in this category
are board, card and adventure games designed to be played
simultaneously.

Most of the growth in gaming is occurring in online games.
Framingham, Mass.-based International Data Corporation expects that
by 2005, the online gaming audience will rise to 80 million, from
58 million today. Sony Online Entertainment's gaming Web site, The
Station (www.station.com), has more than 12 million
registered users, while Microsoft's Gaming Zone (www.zone.com) has a
membership of 29 million. And many of those players are spending
more time than ever at the sites: According to YaYa, a Los
Angeles-based advergaming firm, players spend an average of 5 to 7
minutes on an advergame site, a clear advantage for advertisers
over a 30-second TV spot. Ha, for one, says that the 20 hours a
week she spends playing games has come at the cost of her TV
viewing time. â€œOnline gaming is becoming pretty mass
market,â€? says Chris Di Cesare, group product manager for
Microsoft's Gaming Zone. â€œNot only is it a broader
demographic than console gaming, it's flexible and customizable so
that you can target quite easily.â€?

One of those targets is older women, who have accounted for a
healthy portion of the growth in gaming. Microsoft's Zone.com
considers its core users to be 25 to 34 years old, depending on the
game. However, card and board games skew slightly older. But even
older demographic groups are showing up in record numbers.
â€œThere are many games that appeal to women between 34 and 59,
who are a prime demographic,â€? says Jane Chen, director of
strategy at YaYa. â€œThey're one of the key markets that are
considered hard to reach.â€? Chen says, for example, that she
is currently developing a game for the Chrysler brand of car that's
specifically targeted at middle-aged women.

Whereas manufacturers like Nintendo once sought to attract
female players by offering game consoles in pink, attracting girls
and women today means speaking to their needs and social habits. A
key driver, say researchers and analysts, is women's quest for
community, compared with men's drive to compete. â€œThe
opportunities lie in really playing with communications tools that
women regularly use, like Instant Messaging and e-mail,â€? says
Laura Groppe, president of Venice, Calif.-based Girls Intelligence
Agency, a marketing and research firm focused on young women.
â€œAt the end of the day, women want to connect with each
other.â€?

For that reason, analysts agree, women tend to gravitate toward
card, board and role-playing games that encourage participants to
communicate and meet, while men tend to focus on
â€œadrenalineâ€? games that involve some violence. And
because women often indulge while at the office, they tend to
prefer quick, simple games that can be played in minutes, instead
of long, complex ones that can take days. Ha, for her part, notes
that even when playing adrenaline games, she enjoys the
conversation with other players and usually stays on chatting even
if she loses her turn. In general, Groppe says, women tend to
eschew violence in favor of other elements. â€œIt's not that
women don't like violent games, it's that they don't get it. To
kill things just to get to the next level is pointless,â€? says
Groppe. â€œThe story and the environment are far more
compelling.â€?

Yet women have also begun to change their habits as they've
grown more familiar with gaming, Groppe admits. Ha, for example,
began participating in role-playing games six years ago and avoided
more violent ones. But now, she says, she is more comfortable with
adrenaline games like Counter-Strike, though she also likes to play
quick games when she simply wants a break. â€œAs the technology
gets more amazing and more women begin to play, their interests
will shift,â€? says Groppe. â€œIn the beginning, women
didn't like adrenaline games. Now you find a lot more of them
playing in that category.â€?

Advergaming's Pitch

Demographics make advergaming a promising marketing tool. Banner
ads failed, sponsorships have shown poor returns, but advergaming
immerses targeted audiences in a company's brand for comparatively
limited expense. Kent Mar, founder and CEO of San Francisco-based
advergame developer Virtual Giveaway, for example, targets gamers
based on four variables. First, the content of the game itself is
tailored to suit the desired customer. Games of strategy can be
directed to upscale, educated users, while action games can be
geared to younger users. A second way to tailor the advergame is by
the location through which the game is promoted â€" via, say,
e-mail marketing campaigns or on Web sites. For instance, ESPN has
78 percent male users for its games, with 60 percent under age 34;
Lycos Gamesville users are 60 percent female, and 65 percent are
over age 35. The third method of tailoring content is the contest
structure of the game â€" how users win. When Virtual Giveaway
created an advergame for Sega Dreamcast, for example, it had a
specific target: males under age 25, who are highly competitive and
action-oriented. So the company created a game in which players
would master the game and enter into a series of tiebreakers after
a certain number of plays. Core users spent upward of 60 hours a
week playing. A fourth type of targeting is based on geography,
where demographic information is used to point gamers to such
promotions as local retailers or dealers.

No matter how it is tailored, the key to successful advergaming
is setting clear goals. â€œWe find targeted games with
strategic objectives laid out upfront are the most effective
method,â€? says YaYa's Chen. Chen, who with former colleague
Matthew Ringel first coined the term â€œadvergamingâ€?
while at New York City-based interactive firm , says
some of the most successful efforts in the category tend to be
those seeking to capture information about players.

Marketers can gather data through sweepstakes entries, from
opt-in programs soliciting more details or by culling demographics
from users who wish to post high scores. While there are
restrictions on the kind of particulars that can be obtained from
kids, adults can provide a wealth of information â€" from
e-mail addresses and basic demographics like age, gender, address
and income to favorite car color preferences.

Justin Galvin, director of business development for ,
says the proof of advergaming's success over other forms of online
advertising is in its ability to start a dialogue with consumers.
â€œAdvergaming gives an ad a lot more depth,â€? says
Galvin. â€œConsumers are interacting with something that has
value to them. They'll register to play a game; they'll log in to a
database to play against each other; they'll come back to check
scores. They'll continue to interact with the brand, offering
marketers an ongoing opportunity.â€?

What's more, the effects are measurable in other ways. Companies
can track how many times a game is downloaded and played. Virtual
Giveaway says the average gamer spends 5 to 7 minutes on an
advergame site, approximately 14 times the amount of time spent
watching a television commercial. Moreover, during that period, the
user is clearly an active receiver of marketing messages, whereas a
television viewer may leave the room during a commercial break.
Companies can also survey users to determine brand recall and
positive brand impressions. In 1999, Toyota launched Tundra
Madness, a digital racing game. After attracting 8,000 consumers
who spent an average of 28 minutes on the site daily over six
months, the company's research showed that the campaign raised
brand awareness by 28 percent and intent to purchase by 5 percent.
The automaker has since launched additional advergames, for a wide
range of targets. Last fall, for its new Matrix model, the company
targeted first-time car buyers, with the Matrix Video Mixer game,
promoted through sites like RollingStone.com, GetMusic.com and
Launch.com. The effort was tied to a Gravity Games sponsorship and
an in-theater commercial campaign. About 3 in 10 registered users
forwarded videos created through the game to their friends; 65
percent of those e-mails were opened.

Several other success stories speak to advergaming's potential.
Consumer products giant Procter & Gamble's 2001 Mission Refresh
campaign for Head & Shoulders shampoo, targeted at U.S.
Hispanic youth, opened up a whole new market, says Anastasia
Kitsul, interactive marketing manager for P&G's multicultural
business development group. She says the company chose advergaming
for its relevance â€" Hispanic teens spend a lot of time
online, and one of their favorite activities is gaming. To reach
this market, P&G positioned the advergame on gaming sites
within Hispanic portals, such as Terra.com and YupiMSN.com. More
than 4,000 users forwarded the game to friends, and 70 percent of
users told P&G they enjoyed the experience. The company
considers the results successful enough to plan advergaming
campaigns for a number of brands, including CoverGirl cosmetics and
other youth-oriented products.

Even moms are considered a viable advergaming target. Purina
developed a game in conjunction with Microsoft's Zone.com to reach
young mothers. The campaign involved sponsorship of Outsmart, an
online game show that matches celebrities with online users in a
trivia contest. Purina's pick? Former TV mom Florence Henderson,
who competed with gamers to test their knowledge of The Brady
Bunch. In the first 10 days, users played the game half a
million times.

Automakers Are Game

Of course, some industries lend themselves more readily to
advergaming than others. Automotive companies were among the first
to take advantage of these games, and remain one of their most
significant patrons. In addition to Ford, General Motors, Toyota,
Honda and classified Web site AutoTrader.com have used advergaming
as part of their marketing strategies. After Dodge Speedway
launched in February 2001, traffic to the Dodge Garage Web site
shot up 477 percent, with 284,000 unique visitors playing the game
during its first week. In total, more than 1 million unique
visitors logged on in its the first year. Pete Hollinshead, CRM Web
and direct marketing specialist for Auburn Hills, Mich.-based
DaimlerChrysler, says the program has generated leads for local
dealers through opt-in information programs. He attributes much of
the game's popularity to its placement. â€œResiding on the MSN
Zone gaming site attracted people who might never have come to
Dodge,â€? Hollinshead says.

General Motors launched its GM eMotion Challenge last year in
order to promote awareness of its Powertrain control system among
educated males, ages 18 to 35, but found it also attracted a large
number of females. Although GM anticipated a ratio of 80 percent
male users to 20 percent female, Bill Lussier, brand manager for
Powertrain at the Detroit-based firm, says, â€œWe were
surprised at the demographics we've seen â€" about 45 percent
female.â€? Meanwhile, AutoTrader.com took a broader promotional
approach, linking its advergame to its own site as well as to AOL,
CompuServe, Ask Jeeves and CNNSi. The company also created print
ads in its offline magazine and launched an e-mail marketing
campaign to target youths, ages 18 to 24. The campaign brought in a
significant number of its 550,000 unique visitors within the target
market, with 49 percent ages of 18 and 34, and 65 percent women.
John Kovac, AutoTrader.com's director of advertising, is planning
to launch a new advergame this summer.

Additionally, in an effort to combine online and offline
marketing, the Ford Motor Company linked its advergame strategy to
an offline component. It created a racing game tied to the creative
of its general advertising campaign of racing on the moon.
According to YaYa, Ford received a 40 percent click-through rate on
its initial e-mail campaign, with users sending the e-mail to an
average of three friends. In the process, Ford captured individual
consumer data as well as information on car color preference.

What more could advergaming capture? The marketing technique has
become so popular that it has been adopted by a broad range of
industries, from packaged goods to beverages, from law firms to
nonprofits. In December 2001, YaYa developed a campaign for the
Siemens Corporation to promote its transportation services,
targeted to mayors, government contractors and CEOs. Even the U.S.
Mint now offers games on its site, both for educational value in
the form of â€œedutainmentâ€? and to encourage teens'
interest in numismatics. The site attracts more than 1 million
visitors a month, and since the launch of its games in 1999, the
Mint has signed almost half a million subscribers to its
newsletters and sold more than $156 million in products from its
online catalog. After seeing a number of environmental groups use
advergaming techniques to promote their goals, Steve Bosak,
director of motorized use programs for nonprofit advocacy group the
National Parks Conservation Association, decided to launch an
advergame in March 2002. â€œOur demographics tend to be 50 and
older,â€? Bosak says. â€œI want to reach younger people and
draw attention to snowmobile regulations that would affect
Yellowstone.â€?

For all that promise, however, games are still far from a proven
marketing strategy. While it's possible to track the growing number
of consumers who play them, some industry watchers say it's hard to
know what actual impact the games have on consumers' brand loyalty
â€" or their likelihood to encourage a purchase.

There's also a thin line between innovation and gimmick. Jim
Nail, senior analyst at Forrester Research, calls advergaming a
nascent market that is â€œby no means a proven type of
advertising, yet.â€? In the first place, he says, there's still
a big gap in knowledge. â€œConsumers play these games and it's
easy to track how often and long they play,â€? says Nail.
â€œBut I haven't seen much research about how that changes the
way they feel about the brand and their intent to purchase.â€?
Adds Rudy Grahn, an analyst at Jupiter Media Metrix, â€œTalking
about advergaming as an inherently effective way of driving traffic
or transactions overstates its value. It's a promotion in many
ways, and promotions attract people who are drawn to the promotion,
not the brand.â€?

Ultimately, the question is whether advergaming will speak as
loudly to gamers like Janet Ha. â€œI don't spend much time
watching TV anymore because of all the time spent playing games and
doing other things on the computer,â€? she admits. She plans to
pick up a new game, WarCraft III, soon. â€œI just need to get
started [playing], and once I do I can't stop.â€?

At the Top of Their Game

More than 15 million unique users visited gaming sites in
January.

TOP 10 ONLINE GAMES SITES IN THE U.S., HOME AND
WORK

Site

Unique audience (000)

Acitve reach

Time per person

Pogo.com

6,564

5.6%

3 hours 49 minutes

Zone.msn.com

5,373

4.6%

1 hour 40 minutes

EA.com

3,857

3.3%

14 minutes

GameSpot.com

2,834

2.4%

13 minutes

Ign.com

2,678

2.3%

25 minutes

*Cheatcc.com

1,827

1.6%

9 minutes

Uproar.com

1,448

1.2%

1 hour 24 minutes

*GameWinners.com

1,419

1.2%

7 minutes

GameFAQs.com

1,299

1.1%

9 minutes

Candystand.com

1,262

1.1%

37 minutes

All online games

15,448

13.2%

26 minutes

*Home and work audience duplication projections did
not meet minimum standards for size. As a result, combined home and
work audience estimates for these sites may exhibit increased
variability month-to-month.

Note: list does not include traffic to unique sites
of the Yahoo.com
domain.

Source: Nielsen//NetRatings, January
2002

In on the Game

PC advertising is expected to grow to $774 million in 2006 from
$134 million this year.